The Canadian card and payments market is valued at approximately $913.4 billion, according to GlobalData, with a projected Compound Annual Growth Rate (CAGR) of over 5% until 2028, showing the strength and stability of a thriving market with significant growth opportunities for those ready to strike.
The Canadian eCommerce and online payments sectors continue to thrive as well, with expectations of reaching north of $140 billion in growth by 2025, a CAGR of 17% over the past 5 years. Like the U.S. market, digital shopping has become effortless and therefore, preferable for consumers. With more Canadians than not owning a smartphone, cardholders are actively seeking frictionless transactions no matter where they shop driving adoption for convenient in-store tap-to-pay options, one-click online shopping, mobile wallets, “Buy Now, Pay Later,” and more.
For software companies operating in the U.S., expanding their payment processing operation into Canada presents an attractive opportunity to increase their market share across North America and can be carried out with the right payments partner by their side. Fortunately, there are solutions you can offer your customers to help avoid these payment pitfalls. Throughout this blog, we delve into false declines through the lens of a software company, helping you answer top of mind questions.
Key Canadian regulatory considerations
If expansion is of interest to you, not unlike processing in the U.S., it will be important to understand the current regulatory landscape in Canada, particularly two key frameworks, to ensure compliance.
- Canada’s Code of Conduct for the Credit and Debit Industry: This code protects consumers by ensuring transparency in pricing and contracts, particularly for credit and debit card transactions.
- Retail Payments Activities Act (RPAA): Effective November 1, 2024, this legislation further regulates payment service providers (PSPs) in Canada, enhancing consumer protections and holding PSPs accountable for securing transactions. In short, all organizations classified as a PSP under the RPAA, including platforms, must register with the Bank of Canada to adhere to this legislation.
Software companies should familiarize themselves with these frameworks or work with a payments partner who can guide them through the process to ensure compliance.
Payment processing nuances in Canada
From a payment processing perspective, software companies familiar with the U.S. market will find some similarities in Canada. However, there are a couple of key differences of note.
- Interac: Canada uses a single debit network called Interac, which ensures secure payments for in-person transactions. Companies must certify their payment devices to meet Canadian standards.
- EMV integration: Canada was an early adopter of EMV technology, with "pay-at-table" setups for restaurants being common. Companies looking to expand should ensure that their devices support mobile and contactless payments to meet customer expectations.
While there are nuances to consider, the platforms that will succeed with their expansion initiatives are the ones that think about their expansion efforts as a North American opportunity, not just a Canadian one. By approaching the market holistically, platforms can capture a larger customer base and offer their services seamlessly across both borders.
Choosing the right payments partner for Canadian expansion
When it comes to success with payment processing in Canada, a payments partner with robust capabilities, particularly an organization that can provide seamless integration across both the U.S. and Canada, is paramount for software companies to consider. The ideal partner should offer your platform:
- A single integration option: A unified integration that can handle payments in multiple regions, reducing the complexity for software providers.
- Global reach and scalability: The ability to support growth as the company expands into new markets.
- Customer-centric approach: A partner that prioritizes user experience, helping design a streamlined and efficient payments journey for the end-users.
- Security, risk, and compliance: The ideal partner should understand this key area holistically, globally, and by region, helping you to ensure compliance and mitigate threats to your operation no matter where you’re processing payments.
For those interested in learning more about aligning with a strategic payments partner to help actualize this opportunity, gathering insights on how to pick the best provider for your platform is the first step. To aid in this discovery, we created a buyer’s guide to help software companies, like yours, choose the right Embedded Payments partner for your platform. Download your free copy today to make an informed decision and set your platform up for continued and long-term success processing payments in Canada and beyond.